First came the Bakken in North Dakota.
Then came the Eagle Ford, on the Mexican-Texas border.
In a new note, Goldman Sachs’ Jeffrey Currie says the third epicentre of the great American shale boom is about to reveal itself.
Its location: West Texas’ Permian Basin.
We’ve put his projections for all three boom hubs through 2016.
That year, the Permian will surpass both the Bakken and Eagle Ford.
Right now though, all three are still producing way more oil than the country has seen in decades, and their output is likely to saturate North American refineries so thoroughly that the federal government may have to ease export controls (currently raw crude cannot be shipped abroad). Currie:
“Ultimately, as US light crude production continues to grow, exports to countries other than US and Canada might become the next necessary step in order to avoid a shut-in of US production as we don’t consider ‘synthetic’ medium blending in the U.S. Gulf Coast will meaningfully absorb incremental US light supplies.”
At a minimum, the discount on U.S.-traded crude contracts is going to increase: Currie is lowering his bearish target for WTI to $US9 a barrel, from $US8.50, for 2014.
That means it’ll be around $US98.
It’s trading around $US102 today.